Blockbuster Swot Analysis

1566 words 7 pages
Tabari Holloman
Business Policy

Blockbuster Video Swot Analysis

Blockbuster Inc. is an American-based chain of VHS, DVD, Blu-ray, and video game rental stores currently under Chapter 11 bankruptcy. As of January 3, 2010, there were over 5000 Blockbuster stores in the U.S. and 17 countries worldwide. It is headquartered in the Renaissance Tower in Downtown Dallas, Texas.[1] Because of competition from other video rental companies like Netflix, Blockbuster has seen significant revenue losses. The company filed for bankruptcy on September 23, 2010.

* Lead market share of online rentals
* Low fixed costs
* Worlds largest selection of DVDs
* Fastest delivery time of any online DVD rental company with over 35
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With 2 million members Netflix is clearly the leader in this fast growing market. Quick on its heels however, is Blockbuster, and Wal-Mart who have offered similar services but failed to knock off Netflix as the leader. The firm now faces its biggest threat in its young life, entering the online rent by mail market. Though still on the horizon, Netflix has begun proactive efforts to prepare for the coming battle with Amazon’s massive inventory and distribution systems. One of its efforts was dropping its price this year from $20.00 a month to the current $17.99. Blockbuster responded by dropping its price to $17.49 but has failed to see any serious shifts in market share (WSJ).

Nervous Investors Investments in Blockbuster have steadily become even more of a cause of stress among investors since the case. Its most recent issues include a plummeting stock price, its split from Viacom Incorporated and the resignation of its CEO/COO Nigel Travis. Blockbuster has tired to quell the unrest this year by increasing dividends but with the company reporting a loss for the 3rd quarter of this year, this has not stopped its stock from hitting record lows (WSJ).

Strategic Alliance with Philips Electronics In 1992, Blockbuster joined forces with Philips Electronics. Philips Electronics bought 13 million shares of Blockbuster stock, which is what started the alliance between the two. The reason behind Philips


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